Vol. 567 No. 1
149 Mr. J. Higgins asked the Tánaiste and Minister for Enterprise, Trade and Employment the measures which are in place to prevent companies owing substantial sums in unpaid wages and tax from declaring bankruptcy on purpose and then starting up again under a new name for the sole purpose of avoiding their legal responsibilities; and her views on whether measures to stop this practice should be strengthened. [13637/03]
The activity referred to by the Deputy is called the phoenix syndrome. The main company law provisions to deal with the phoenix syndrome are contained in Part VII of the Companies Act 1990. Part VII and related provisions provide that where companies are wound up and are found to be unable to pay their debts or where companies are not wound up because they are unable to meet their debts, the directors of such companies are restricted from being involved in the promotion or formation of a company or acting as a director or secretary of a company unless that company has a specified minimum paid up share capital. The amount of the minimum paid up share capital is €317, 434 in the case of plcs and €63,487 for any other company. To avoid restriction, a company director must be able to show to the court that he or she acted honestly and responsibly in relation to the conduct of the affairs of the company.
Part VII also provides that a person who is convicted on indictment for an offence in relation to a company or for an offence involving fraud or dishonesty is automatically disqualified from having any involvement in the promotion or formation of a company or acting as an officer of a company, irrespective of the paid up share capital without the matter having to go before the courts. Also, the court may disqualify a person where the person is adjudged guilty of a range of matters, including where the conduct of the person makes him or her unfit to be involved in the management of a company.
The recently established Office of the Director of Corporate Enforcement will have a major role in combating the phoenix syndrome and has been fully resourced and given a range of enforcement powers to this end. In addition, the liquidators of all insolvent companies are now required to seek the restriction of all company directors, unless specifically relieved of that obligation by the Director of Corporate Enforcement.
150 Mr. J. Higgins asked the Tánaiste and Minister for Enterprise, Trade and Employment the measures which are in place to protect employees from companies that declare bankruptcy on purpose and then start up again under a new name for the sole purpose of avoiding their legal responsibilities; and her views on whether measures to protect employees should be strengthened. [13638/03]
Employees of companies that go into statutory insolvency, which includes liquidation, receivership and bankruptcy, may claim for unpaid wages, holiday pay, minimum notice and other entitlements under the insolvency payments scheme, which is administered by my Department under the Protection of Employees (Employers Insolvency) Act 1984. The circumstances of the statutory insolvency do not affect the employees entitlements. I should also mention that section 56 of the Company Law Enforcement Act 2001 provides that the liquidators of all insolvent companies must provide reports to the Director of Corporate Enforcement on the conduct of the directors.
